Helping Farmers Save The Amazon

Eduardo: [00:00:00] In today’s episode we have Augusto Andrade, an industrial engineer, business consultant, and Nima Darabi, data scientist and technologist. They’re now co-founders, CEO and CPTO of Skoog a company that scales and democratizes carbon credits related to forests and agriculture. They work with farmers, universities, and agro-associations across Brazil, making them aware that they can make money by preserving the forest and improving their agricultural practices instead of cutting the forest. Welcome to the show. 

Tell us a little bit about your journey. How did you get started?

How did you end up here?

Augusto: I’m from Brazil. My dad is a farmer, also agriculture engineer, both my mom and dad.

I followed to study engineering and started a career in consulting and travel and moved around quite a bit. But then I took a break after 15 years to do a program for startups.

I just really [00:01:00] wanted to be involved in startups and innovation.

 I knew that innovation was really happening with startups, then I met Nima, and his love and his passion for nature and it all came together. and, Nima’s story inspired me a lot so maybe he can tell how he got involved with that. 

Nima: I’m originally a caged animal, so I come from Tehran and from this metropolitan of concrete. My passion for plants came from the fact that I didn’t have the fortune of growing up with too much of nature.

As I also seen Norway, many people are kind of brought up with I developed this fascination about plants. My selfish part was the curiosity. Then comes the impact. At some point, I decided that we should, use our resources into making a change.

 I really try to come up with an idea you can show to the investors that is viable economically.

And my best shot was to look at urban trees and how they impact the [00:02:00] price of properties. And when I pitched about this Augusto just took me aside and said, Hey dude, you can use this in the carbon market and I wasn’t aware of that. So he came up with this innovative idea to combine this impact and grow a business that’s sustainable.

And this has been really our motto from the start. We can grow an economy and GDP at the same time that we preserve the nature.

So this was how we met and connected and bonded, and immediately with the synergy that we had, we came over with a lot of different ideas and narrowed down until we’re here. 

Eduardo: What is this solution that you have come up with? What does it do? 

Augusto: Skog means forest in Norwegian but it spelled with one O, we put a double O both because we want that infinite loop, but also so foreigners can pronounce it a little bit more like it sounds in Norwegian. In terms of vision, it values forests. As Nima said, he always says this thing that trees are very data friendly because they don’t move. In theory, they’re quite easy to count [00:03:00] from the sky.

So it’s about valuing forests in the first application, which is carbon. The reality is the way we explore forests is not very intelligent, and we didn’t have technology to do better.

Our idea is to work with private land owners, especially in Brazil. Every time you hear about deforestation in Brazil, you see the president face and how bad this administration has been for the environment and I don’t disagree with that. But half of Brazil is privately owned. So a lot of people own forest land, and the only notion of progress is put it down to plant lately it’s been soy, a lot of cattle. I think cattle is the main driver. Our idea is to try to value that how much carbon would that emit if you deforest or if you reforest an area. It gives access for land owners to carbon markets, so they think of another way to use the land. A way that they will get a financial return, but without. [00:04:00] deforesting or using land the way they use now for agriculture in not very clever ways.

Eduardo: You said carbon markets and carbon financing is the first step, but what is the long term play for Skoog? 

Augusto: To be able to understand how much carbon an area can sequester or can hold, you need to understand what trees are in that area. If you know what trees are in that area, you can think of better ways to exploit those trees in a sustainable way. For example, if you have r of land in Brazil where there’s a lot of acai, which is a fruit from the Amazon, it’s worth far more than any other, just think only of money, it’s just worth a lot more.

And that’s because acai has become mainstream. The same technology we are gonna develop to count and classify trees, in the future, hopefully they’re gonna be used to understanding the value of each tree and then exploit it sustainably. 

Eduardo: How do you go about [00:05:00] getting the data onto the platform that you need to assess?

Augusto: We’re gonna get data from several different sources like public records. We need to mix that data with some sort of carbon mapping. We need to understand how much carbon is in different parts. Brazil is quite a large country and it has six biomes.

Each one of those biomes have different carbon density and they are facing different risks of the forestation. So The idea is to combine data from different sources. Almost like you’re narrowing down, in the beginning you can use a lot of satellite and more wide type of carbon maps. When you get closer to actually developing a project then you need more granular data, which will come from manual measurements. Whatever is the cheapest way we can use and quickest to get the data that we need in the level of confidence that we need to develop the projects. 

Eduardo: The next question is about the multidisciplinary models. I read that Skoog has this ability to [00:06:00] run for different financial models and financial gains. What does that mean, and how does that benefit the landowner?

Augusto: It’s quite funny actually I was in Brazil. I was in my farm and I was asking my dad like, oh , why do you raise cattle? He’s like, oh, you know, it’s tradition, it comes from your grandfather and probably your great-grandfather before that. And I asked him, would it be more beneficial if you plant eucalyptus? There’s a lot of eucalyptus in the region. Actually Nestle has a large area they reforested there. I asked him if it was financially more beneficial. He didn’t know. People don’t have this idea of how much their land would really be worth if they use it for different purposes.

so The idea is that we have a model where farmers join and we show them how much their land could be worth in different sustainable scenarios.

 We know, as a matter of fact, for many scenarios, it would be more beneficial to change the way they do things depending on the carbon density. It is like ESG for farming if you think about it, it’s more sustainable and more profitable. 

Nima: Yeah. You know, [00:07:00] because we deal with the entire process of issuing carbon credits, also verification and selling from supply to demand site, we deal with many different data sets.

So two important tasks that we have one is to measure biomas and the other one is to estimate the risk and they all use a variety of different data sets.

From the category of remote sensing, that’s the typical thing that pretty much all the tech companies in this area do is using Airborne and Terrestrial lidar data. So that’s relatively accurate to estimate the biomas but we also want to do the shortcut and use the view of the trees from above and use algorithmic equations also in order to estimate the biomas, but that has just a portion of the work. The type of data jobs that is more controversial when it comes to carbon markets is estimating risk and quantify metrics that are involved like additionality, [00:08:00] leakage, baseline. These are different metrics that can assess if a project does the real work.

Augusto: We, we see a lot of tech companies getting into carbon markets, also some more traditional companies, developing carbon projects.

We’re kind of trying to combine those two roles. We think to really drive the change you need to have a team on the ground. So far, it’s just me going around the different parts of Brazil. I went to the Amazon. I went to another zone in the Southeast, and there’s a different biome called Savannah.

And then the transition from that to the Atlantic Marine forest. Talking to people, testing those models I set on the ground, testing those assumptions, and validating the model. It was very much confirmed what I suspected that when you talk about carbon credit to them, it’s this abstract entity that will come and change things but, they never heard about, even though this market has been going on for 25 years. Those companies are creating the technologies and we are gonna be one of them pushing the technologies, pushing the boundaries, [00:09:00] to be able to measure things more effectively.

We wanna have people on the ground, telling people that you have to use land differently, even for their own benefit for the financial gains. But that’s more like the carrot. We really wanna explain that what they’re doing is damaging.

And I manage to convince a few and they’re very, very hard to convince cause they’ve been doing the same things in the same way. But when I come in and I show them even the most basic technology, I just show them on satellite, the area that they clear out over time and then I zoom out and I show how the whole thing looked like 25 years ago and they get shocked. They’re looking at their own land. They forgot about the environment and they can see the impact. Oh yeah, there was a river there that is running very low, it’s dried out. They feel the impact, but they never really zoomed out. When I was there, I talked to cattle ranching associations, cooperatives, universities. I felt like no one was pulling them together to drive this change on the ground.

Eduardo: Wow.[00:10:00] In systems thinking we call that a bounded, rationality, and people just take decisions based on what they think is best at the moment. But the moment you expand the vision a little bit, it drives behavior. So talk to me a little bit about what is the process to get carbon financing in just the regular process market, and then how Skoog is changing that?

Augusto: What companies do they scout an area. They find an area where there’s a high deforestation rate. Then a lot of them acquire the land and then they develop the project they certify and then they sell the credits.

There’s also companies buying and selling. This thing about buying the land felt wrong to us cause it’s almost like: oh, we found a clever way to get more money out of that land. Let’s buy it and take whoever’s living that out of there.

We think it should be more democratized, right? If you find a way for landowner to make more money out of the property and do good for the environment, we should tell them, not just buy [00:11:00] the land. Right?

So that’s kind of how it works today. That different types of companies, some of them develop the project, some of them do sort of the measurements, some of them do the certification, the validations.

We kind of wanna do the whole thing because we want to connect the buyers and sellers mostly so there’s more money left to the landowners. We talk to some of them in Columbia and we know how much carbon is worth today and they’re getting like a fifth of it.

The more there is left to the landowners the more we can compete with things like cattle or soy. 

Nima: Regarding the pricing of carbon is the same as anything else is the supply and demand in a free market. And something that Augusto made me understand in the early days that we met each other was that this market is undersupplied. There’s a lot of demand for all these different types of carbon credits. We see that different carbon indices have different pricings.

I [00:12:00] actually don’t know what exactly defines this price. So we want to figure this out.

Regarding the process also, I want to bring cryptocurrencies as an example. 10, 15 years ago, you could not really imagine that you can make a currency and go around and sell this currency and establish that this is actually something that we can trade with. So we do want to register and we do want to certify as much as we can, but if you do deliver real impact, if there’s a forest that is being cut down and you can stop it, and someone pays you to do that we think we might be able to facilitate that payment and that agreement between the seller and the buyer.

Regarding the change, how are we gonna make the change? You need to identify and calculate the agent of deforestation. So whatever that pays them to cut down and plant soy or cattle or Palm trees elsewhere in the world, they you need to be able to match that, but also reduce the initial cost.

[00:13:00] Because something that we realized was that the initial cost of just defining and certifying a project is too high that makes it just impossible to approach the long tail of this market. I think the break down that we, we found was like around was it a thousand hectares? Currently below that is not worth for them to sell their carbon. And we can reduce it to 50.

Eduardo: I understand that from the process that you described the biggest bottleneck like seems to be getting this idea in the minds of people that they can do something different than what they had in mind.

So this diffusion of this knowledge is the primary bottleneck. 

Augusto: I can tell you what they told me on the ground. Right. They told me once someone here in the region starts to get paid.

Things are gonna spread. That’s a bad metaphor, but spread light fire, right. That’s also the reason we believe in the boots on the ground thing, cuz one of our flagship [00:14:00] projects might be with the leader of the cattle association.

If he goes swimming against the tide and he stays in front of this group of people who the purpose in life is to raise cattle and say, look, I’m gonna actually use my land differently. And that can change things because he’s gonna become a change agent and that’s what we believe in.

Eduardo: Yeah, there’s a, lot written about the diffusion of innovations and it follows exactly the pattern, right? When you have a change agent, but that change agent needs to fit certain characteristics.

And it’s not everybody. It’s people who are more open, maybe the ones who are a little bit more resource rich, with more education likely to be more open to this. And then it spreads from there. 

Augusto: And you’re right.

Yeah. The first ones might have to be someone with a higher ability to influence, because I work with business transformation for 15 years and you come in and try to tell them to do things different and change their processes, change the systems and we will have to have people everywhere essentially. 

Eduardo: How long does it take from the moment you [00:15:00] identify an opportunity to the moment that they actually get the carbon financing? 

Nima: Once you have the technology in place, first, we have to build several components. The human factors are the only inertia, I would say.

Augusto: But I mean, today takes a long time.

That’s what, what our research shows, right?

Nima: Two years. It’s certain, maybe a quarter, you know, like much shorter 

Augusto: I think from the time they find the land and develop the project, get it certified. We sure wanna accelerate it. Doesn’t feel like we have that much time to wait here.

Eduardo: Well, there’s a lot of deforested land for growing cattle. Brazilian steaks are very popular around the world. What can be done with land that is already being used for cattle. What can they do to minimize impact?

Augusto: Yeah, well, we begin what we call super pasture, right? Which is a mix of forest and pasture. There are things like rotational grazing, which people like my father who’s educated and he’s a agriculture engineer. [00:16:00] He does it, but it, it it’s essentially taking a longer term view.

It’s almost like sustainability for farming, as I said. Because my dad has both the academic and the the tactical knowledge. Let’s say he has a big area and he divided into different areas. And then he never lets the grass go below a certain point.

He could have increased the number of cows in that area, which means they would eat more and then the grass is gonna get lower. And then when it rains, it sort of washed away the soil. That’s what you don’t want. So he rotates them.

People try to push that to the limit. And if you implement, for example, those a agri forestry systems where you mix forest with grass, you’re gonna have branches falling, leaves falling, and that becomes organic matter.

That’s why we like in our logo there’s an infinite look things just…

Eduardo: just regenerate. Yeah. 

Augusto: Regenerate. Yeah. But then they need an incentive. Cause it’s not easy to implement some of this stuff.

I was talking to [00:17:00] this guy, I told you, who’s the president of this cattle association. He tried himself and it failed because you need the right combination of grass in trees, topography matters, the space in between the trees matters. In the way he did it, I think he got too much shade on the pasture.

But when it works, it really works. It is almost like a synergetic system where the trees grow better than the wood without the grass. And the grass grows better than the wood without the tree.

The funny thing, it gets more productive. So the cattle grows faster essentially. So it’s a really a win-win but you need knowledge. And that’s the part that is hard to scale.

Nima: Even when people clear cut, if they just leave that last 2%, the cow still has as much grass to eat, is well fed and is fatter and happier. This modern mindset of go and conquer and just clear cut and optimize and extract at maximum value.[00:18:00] 

That’s what we’ve done. Like we, we humans, we extract, everything out of nature and it’s actually not productive. Is just, you know, give that little extra couple of percent and, or bring it back. And then so much magic happens in that area and we do it with design.

When I was trying to make trees profitable the past four years, and I heard this, I got this idea from many people that first you have to manifest the change that you want to make. So it was a lot of talks about AR and VR and trees are not difficult object to visually augment.

So when we can actually sort of manifest an area, okay, this is your empty land. This is what it’s gonna look like if you plant these kind of species and these are the choice of the right species, this is how it’s gonna look like in three years, five years.

And so when people see it, then they pay for it right. Much easier. So we are also looking into those elements. 

Eduardo: If a landowner goes through the whole motion and gets the carbon [00:19:00] financing.

What does he do now? Like he received the money, then what? What other models or lines of activity that he could engage in now that he has this carbon financing?

Augusto: Yeah. So that, that’s a good question. Cause people have the impression that, oh, you’re gonna be paid to do nothing. Right? Actually they have been doing a service for free. cuz In Brazil, you have an area you have to preserve. If you have land in the Amazon, you can only clear 20%. You have to keep 80, which means you have 80% of forests in your property that you have to manage. You have to have a fence around it, you have to monitor, if there’s some sort of fire, you need to go there and solve it. So they’re gonna just continue to, preserve the forest, but they’re gonna be paid for it. 

We are gonna be looking at two levels, right?

One is the farm level. But when you zoom out, we looking off areas where we can close those corridors. Say, you have a reserve here and a reserve there and you have all those farms in between. And sometimes you see them from the top and you’re like very few [00:20:00] areas left, but if you can preserve that and then create that chain in people like, you know what? All the biodiversity have been locked into parks in plots of landing between and then what they’re gonna do is just what they’ve been doing farming, but in a different way and preserving, but in a different way with a more collective thinking. There’s also the social core benefits of it. We thinking about doing things like agro forestry schools in the region. So it really will be a change. You can think of it as the entire new ecosystem with more companies doing forest measurement, reforestation, studying biodiversity, implementing those systems where they are more sustainable. So we also think it’s gonna be a cooler job for the next generations. They’re less inclined to do farming today, but they’re less inclined to do farming today, the way it’s done. People are becoming sort of stars and YouTubers.

Carbon is one part of the wildlife economy. There’s things like non timber forestry products. So there’ll be gatherers. And I have an example again from [00:21:00] Brazil where there’s this guy who came up with the ice cream shop with a hundred flavors you never heard of because he has the local communities gathering fruits in the forest, and then he turns them into ice cream.

 You have things like Echo tourism. So we just think they’re gonna do different things with their land. They’re gonna be more profitable and they’re gonna be more happy and the environment’s gonna win. There’ll be lots of things for them to do.

Eduardo: So my last question is how long until we see this live?

Where are you in the process of finalizing the platform and getting out there? 

Nima: Yeah we are working on the MVP right now. And then they have different timelines, but I think we would be able to ship out the first MVP with design aspect of either avoided deforestation part that is you are told by the software, which areas you can preserve and how much money there is and what are your alternatives,

and for the other one, probably just a little bit longer time [00:22:00] yeah. That’s, that’s our plans. 

Augusto: We don’t wanna work with something theoretical. Additionality is like, number one. We don’t wanna be creating technology here for six months, one year without preserving anything.

Another reason we went to Brazil is to scout land and we got some landowners signed up. And we wanna develop projects in parallel where we develop the tech. So we have a real case to base on. And then we are already generating some conservation or restoration.

So we have people already. We have people, we have partners. I visit this guy who reforested 3000 hectars in the Amazon with a proven method. He can supply seedlings. He can supply people to reforest. So we are gonna create the tech as we develop the projects. We’re gonna kind of do both at the same time.

So hopefully you’re gonna see. You wanna follow us on LinkedIn, you’re gonna see soon, you know.

Eduardo: Let’s go to a rapid five. What’s your top author or book? 

Nima: David Graber, [00:23:00] who wrote the book Bullshit Jobs. He basically says that a lot of the office jobs that we have these years are useless jobs and people who do it, they know that they aren’t really delivering a value. I was gonna add that worse than that are the destructive jobs. There is no job more important in my opinion than conservation right now.

Augusto: I would say the author is Jean Paul Sartre which is linked to existentialism. I’ve been reading him all my life and I think it changed a bit of the way I think.

Eduardo: What leader do you look up to or inspire you? 

Nima: I would go for George Monbiot he’s an investigator and a journalist and also a public speaker.

And I really think that he has been very influential in the cause of conservation to bring radical ideas or ideas that aren’t really radical to the mainstream and showing us that these things are so important. And if we don’t do them, they’re radical. 

Augusto: I quite like Jack Welch.

I [00:24:00] like his old school leadership style. 

Eduardo: If you had a magic wand, what will be one thing you will change or a problem you will fix today? 

Nima: Yeah. You know, I’m very fascinated by networks. And I think every problem that we have is not the individuals that we humans are, but the way that we are connected, the hierarchy, the way this network is functioning.

So I would reorganize this network and that would change everything that would bring the best ideas out, and it makes us survive in harmony with nature. 

Augusto: I would say in my case, land use. When we look at the latest IPCC report, I think is really two big chunks of things that can make a big impact on greenhouse gas. It’s energy, and we think there’s a lot of money going in that direction for a long time. But I think people are waking up for land use in general, which is agriculture and deforestation.

Eduardo: All right. [00:25:00] Number four is who do you think we need to have in the podcast?

Nima: I would say bring extinction rebellion. 

Augusto: And I would say bring our friends from another startup called SUSTI. They’re doing a really good work with fashion and fast fashion, and that’s another very impactful thing that makes a lot of impact in the way that we live. 

Eduardo: Number five, and last, do you think we’ll make it? 

Nima: Yes, I think we can do it if we do it slow and steady, like nature does. I think we have to just live in harmony and calculate it and not give up and it’s a long road. I said three months till we ship the product, but it’s three decades till we actually see a systemic change. So we have to be very, very patient just like nature, but I think we’ll make it. . 

Augusto: Yeah, I, I think the same. I think it’s a yes. You need to show resilience and put your head down, do the work and there’ll be ups and downs.

It’s really a rollercoaster. Sometimes you wake up, like, what am I doing with my life? Sometimes you wake up like, yeah, let’s go and change the [00:26:00] world. But you know, there has been things in my life that showed me the value of resilience. 

Eduardo: thank you so much for coming to the show. Augusto, Nima, pleasure to have you. 

Augusto: Thank you for the invite. 

Nima: Thank you for the opportunity.